Okay, I got this in an email and thought I would throw it out at you. Another reason to stop CAFTA.



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This is such a neat and simple formula for China to take over U.S. manufacturers. Done all according to U.S. law. First the Chinese use their low prices to put U.S. producers in financial jeapardy. Then the Chinese lend the distressed U.S. company the money gained by taking their market share, allowing the U.S. manufacturer to continue and get deeper in the hole. This is especially easy since U.S. banks are now reluctant to lend to U.S. manufacturers. Then as principal creditors, the Chinese creditors can take them over when they declare bankruptcy . Jim


Sporting Goods Intelligence
6/28/2005
Huffy Corp. Re-Org Plan Grants Control to Chinese Govt., Suppliers A
unit of the China Export & Credit Insurance Corp. and Huffy's primary Asian suppliers, headed by Shenzhen Bo An Bike Co., will own the bankrupt company if a soon-to-be submitted re-organization plan is approved by Huffy creditors and the U.S. Bankruptcy Court. The Miamisburg, OH company is aiming to emerge from bankruptcy sometime in H2.
Under terms of the re-organization plan, all of Huffy's pre-petition liabilities will be discharged in exchange for notes and equity in the emerging company, which would be privately held. Huffy's primary unsecured creditors (Sinosure Group), whose top 20 were owed more than $55.3 million when the company filed for Chap. 11 in Oct. 2004, will receive 30% equity (Class A shares) in the re-organized company, a $3 million note, the power to elect the company's new board and five-year earnout potential of up to 51% of the common stock in the new Huffy. Meanwhile, other unsecured Huffy creditors are slated to receive 70% equity in the emerging entity via Class B shares and a $9 million note. All notes and post-confirmation trade credit will be secured by a lien on Huffy's intangible and other assets.

Current Huffy shareholders will receive no distribution under the consensual plan of re-organization, and the company will terminate its pension plan for approximately 3,600 retirees and 130 current staffers. Responsibility for Huffy pension benefits will shift to the Pension Benefit Guaranty Corp. (PBGC), a federal government program that insures pension plans.

When Huffy Corp. and 19 of its subsidiaries filed for Chap. 11 on Oct. 20, 2004, the voluntary petition listed total assets of $138.8 million and total liabilities of $161.2 million. Besides top unsecured creditor Shenzen Bo An Bike Co. (owed more than $16.52 million), Huffy's top unsecured creditors included Bailey Cycle Service of Hong Kong and Taiwan ($6,159,616), Ramiko Co., Ltd. of Taiwan ($5,443,973) and Oyama Bicycles ($3,846,18.
The emerging Huffy Corp. intends to focus on both bicycles and golf equipment, including its Tommy Armour and Ram Golf. In Nov., Huffy reached separate agreements to sell off its hockey/inline (Hespeler and UltraWheels) and snowboard (Lamar, Limited and LTD) businesses for an aggregate $4.12 million to The Forzani Group Ltd. and Lifestyle Brands Ltd., respectively.